This study reviews the progress of Korean firms in the Middle East during the period 1973 to 1981, the first eight years of entry into the market. It provides basic information on which to establish appropriate measures to support activities in the region.
Starting from the advance into Saudi Arabia in December 1973 until October 1981, 89 Korean construction companies were operating in 13 Middle East countries, with their total construction contracts amounting to $37 billion. Deals made in Saudi Arabia accounted for 73.8% of the total contracts in the region, making the country the foremost construction market in the Middle East. It is notable that Iran, which used to be one of the three biggest construction markets in the region together with Saudi Arabia and Kuwait, has sharply lost its importance and orders are on a steep rise from Libya and Iraq.
Orders from the Middle East rapidly transformed from relatively simple civil engineering projects in the early stage into more complex construction projects. 66.4% of deals made from 1973 to 1976 were of small size, under $10 million, putting the average of total deals at $28 million. By 1980, however, the average amount of construction deals in the region soared to $38 million. The top 22 of 89 Korean construction companies operating in the region made 86.2% of the total contracts. As of late 1980, the total service exports from Korea to the region amount to $790 million, with Saudi Arabia comprising 71.3%.
The Korean government set up a comprehensive plan to facilitate domestic firms’ entry into the Middle East in 1975 to internally support those companies and to strengthen diplomatic relations for economic cooperation with the countries. It also enacted the Overseas Construction Promotion Act as a general and basic rule to guide overseas construction business with a licensing system and supportive measures. Other measures include financial supports such as payment guarantees by financial institutions, local financial assistance, overseas construction insurance programs, export bond insurance, comprehensive insurance for export bonds, and preferential treatment regarding tax..
Future policies to assist overseas construction should be directed towards helping companies enhance their international competitiveness through technological innovation.
우리나라의 대중동진출과 지원시책
|Series Title; No||특수분석 / 제3호|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Construction|